By one degree, let’s create a better tax system
Thursday, April 20, 2017 10:29 AM
By Anne Chambers
Small Business Owner
CINCINNATI – As the owner of two businesses, I know a thing or two about the difficulties the current tax code imposes on small businesses. I am the CEO of both companies, Red212, an advertising agency located in Cincinnati, and Jambaar, a Software as a Service Video Content Platform located in Austin, Texas
I had the opportunity to testify recently at a hearing before the House of Representatives Committee on Small Business.
The topic of tax reform came up over and over again. During the hearing, I told the Committee about the tag line for one of my companies, Red212. I explained that at 211 degrees Fahrenheit water is merely hot. But by raising the temperature just one degree, to 212 degrees, change occurs. Steam is created with a force so powerful it can hurtle a locomotive across a continent.
That one degree makes all the difference.
It’s time for leaders to come together by one degree to create a better tax system. Ask any small business owner and she’ll tell you that it’s past time for an overhaul – perhaps one similar to the plan laid out by the House last year.
The first step is to include an equitable reform of tax rates for all businesses – by giving small businesses the same tax treatment that is given to large corporations. For far too long, small businesses have struggled with the cost of compliance and paid far higher rates than large businesses.
The Small Business & Entrepreneurship Council estimates that 99.7 percent of American businesses (or 5.7 million companies) employ fewer than 500 people. Roughly 90 percent have fewer than 20 employees.
Second, it is critical to lower the tax rate for pass-through entities (LLCs, S Corps, Partnerships, and Sole Proprietorships) and C Corps. The House proposal on tax reform addresses the tax rate of pass-through entities by capping it at 25% and C Corps at 20%.
Finally, Congress should repeal the Alternative Minimum Tax (AMT) and the estate tax, allowing businesses to pass from one generation to the next. This meaningful reduction in taxes would give us additional capital to grow our businesses and create jobs.
If Washington is serious about tax reform and strengthening the American economy, the time is now to enact a plan that creates a level playing field for American businesses and allows them to keep more of the money they earn so they can spend it growing their businesses and creating more jobs.
Small business owners need comprehensive tax reform, and they need it right now.